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on Post Keynesian Economics |
| By: | Philip Pilkington |
| Abstract: | Since the beginning of the fall of monetarism in the mid-1980s, mainstream macroeconomics has incorporated many of the principles of post-Keynesian endogenous money theory. This paper argues that the most important critical component of post-Keynesian monetary theory today is its rejection of the "natural rate of interest." By examining the hidden assumptions of the loanable funds doctrine as it was modified in light of the idea of a natural rate of interest--specifically, its implicit reliance on an "efficient markets hypothesis" view of capital markets--this paper seeks to show that the mainstream view of capital markets is completely at odds with the world of fundamental uncertainty addressed by post-Keynesian economists, a world in which Keynesian liquidity preference and animal spirits rule the roost. This perspective also allows us to shed new light on the debate that has sprung up around the work of Hyman Minsky, calling into question to what extent he rejected the loanable funds view of financial markets. When Minsky's theories are examined against the backdrop of the natural rate of interest version of the loanable funds theory, it quickly becomes clear that Minsky does not fall into the loanable funds camp. |
| Keywords: | Capital Markets; Financial Economics; Financial Market Theory; Macroeconomics; Monetary Economics; Monetary Theory |
| JEL: | E00 E12 E40 E43 E44 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_817&r=pke |
| By: | Andres Blancas |
| URL: | http://d.repec.org/n?u=RePEc:ekd:000239:23900008&r=pke |
| By: | Manuel Couret Branco (Department of Economics, Universidade de Évora) |
| Abstract: | What is the scope of economics as a science, what is economics for? Real freedom or what we call substantive democracy has never been an objective of economics. In this perspective freedom, or the lack of it, would not be a purpose of a particular economic system, but at best one of its side effects. In this paper I sustain that economics’ discourse has become one the most substantial contributors to what could be called the erosion of democracy. The first argument used in this case against economics refers to its attempt to be considered a neo-naturalistic science; the second concerns the fact that economics considers democracy contradictory to the expression of its scientific rationality and; the third, that economics crowds out people from decision-making processes by pushing them into the hands of experts. What part should economics be called to play in this search for substantive democracy? This issue is all the more critical that economics has reached the status of a major political fact. Partisan political programs have essentially become economic programs, and economic variables have thereby become major global political issues. One of the ways for economics to contribute to substantive democracy is to propose an alternative discourse to mainstream economics. An economics favorable to substantive democracy should, thereby, be political rather than naturalistic, pluralist rather than monist and, instead of crowding out people from decisions processes, should aim at the co-production of economic knowledge with those concerned by the outcome of economic decisions. |
| Keywords: | Economic Theory; Political Economy; Democracy; Decision-Making. |
| JEL: | A13 B40 K00 P16 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cfe:wpcefa:2014_03&r=pke |
| By: | Andrew Hunt; Ian Stone |
| URL: | http://d.repec.org/n?u=RePEc:ekd:002836:283600038&r=pke |